Nvidia needed the US government to check its CEO; what hope is there for local minorities?

[SINGAPORE] The turmoil at Nvidia over the past week overshadowed just about every news story in the Singapore market, including some that triggered big share price moves – such as City Developments Ltd ( CDL ) flagging significantly weaker second-half performance, and Global Testing Corporation unveiling a seemingly generous take-private deal.

The events unfolding at Nvidia are far more consequential and interesting for local investors than anything happening in their home market, of course.

Even after tumbling 12.7 per cent last week, the maker of graphics processing units (GPUs) powering the global artificial intelligence revolution is still one of the most valuable companies in the world, with a market cap of more than US$3.9 trillion.

More to the point, the ouster of Jensen Huang amid concerns of his extramarital affairs – including with a woman alleged to be a Chinese spy – may have implications for the manner in which the group is run, and sap some of the exuberance from the global AI sector.

Nvidia’s new leadership might not be as willing to provide financial backing to AI companies, which were in turn using the funds to purchase its GPUs. The group may also be subjected to tougher export controls by the US authorities, leading to reduced availability of its GPUs around the world.

Then there is the broader theme of key-man risk at companies so large that they find their way into almost every investor’s portfolio. By many accounts, Huang is a remarkable engineer, manager, salesman and dealmaker. He had some 60 people reporting to him, and no second-in-command.

Yet, on the face of it, Nvidia’s board was able to boot him out when they lost faith in him. Unlike Alphabet’s Larry Page and Sergey Brin, Meta Platform’s Mark Zuckerberg and SpaceX’s Elon Musk, Huang did not have outright control of the company he co-founded and built into the behemoth it is today.

Nvidia has no super-voting share class. The 870.6 million shares beneficially held by Huang as at Mar 23 amounted to less than 3.6 per cent of its total outstanding shares. Nvidia’s other board members and top managers collectively held more than 3.9 per cent of the company’s shares.

Other significant shareholders included BlackRock, with a 7.4 per cent holding, and Vanguard with 7.3 per cent.

What lessons might this have for investors in the many Singapore-listed companies with controlling shareholders?

Larger-than-life leaders

First of all, it’s worth pointing out that the cat was already out of the bag when Nvidia’s board said on Nov 8 that it was initiating an independent investigation into whether Huang had been a target of foreign intelligence, and then announcing four days later on Nov 12 that he had resigned.

While it had only just been reported at that point that Alice Huang had been identified as a Chinese spy by US authorities, the big purchases of Nvidia GPUs by Megaspeed – a company to which she was linked – had already elicited concerns among investors.

In a report dated May 13, short-seller Culper Research laid out in some detail how Megaspeed appeared to be a vehicle for the diversion of Nvidia’s GPUs.

Meanwhile, Huang’s involvement with Kimberly Powell, a direct subordinate, is said to have been common knowledge at the company, according to Stephen Witt, author of The Thinking Machine, a biography of the Nvidia CEO.

Witt said in a column in The New York Times last week: “I started hearing rumours of Huang’s infidelities earlier this year, but was unable to confirm them. Inside Nvidia, there was a culture of omerta that was difficult to break, and this enabled Huang to be his worst self.”

He added: “Ultimately, it took government intelligence to pierce Nvidia’s culture of silence.”

One takeaway from all this is perhaps that demanding accountability from larger-than-life corporate leaders is hard, even if they do not have majority voting control over their companies. Indeed, Nvidia’s recent share price weakness may be at least partly due to investor concern that Huang has been forced to leave the company just when it most needs him.

CDL disappoints again

Given that it took US government intervention for Nvidia’s board to check its CEO’s excesses, minority investors in Singapore – where families or Temasek have outright voting control over many prominent companies – probably have little leverage when performance falters.

Last week, CDL suffered a significant sell-off after the company said elevated interest rates would result in certain capital-recycling transactions originally envisaged for the remainder of 2026 being delayed until 2027.

This came only six weeks after the group unveiled a three-year road map to improve shareholder value that left the market disappointed.

At the beginning of this year, CDL seemed poised to be one of the better-performing stocks of 2026. A startling power struggle in early 2025 appeared to have been put to rest, and analysts anticipated “multiple tailwinds” narrowing the discount at which CDL shares trade to book value.

Yet, CDL shares ended last week at a 52-week closing low of S$6.64 – down 17 per cent since the beginning of the year.

To be sure, it hasn’t been a great year for other major property counters. UOL is down 10.8 per cent, while Frasers Property has tumbled 19.9 per cent. Still, CDL’s share price trajectory suggests broad investor discontent with its strategy, as well as the execution of that strategy.

What should companies do when the long-term plans of their controlling shareholders do not resonate with public investors?

Encourage more exits?

Last week, Global Testing Corp (GTC) unveiled plans to go private via a scheme of arrangement – at S$2.30 per share, a 123.3 per cent premium to its last closing price before the announcement, and 1.15 times its net asset value of S$2.01 per share.

The offeror – Taiwan-listed Tong Hsing Electronic Industries – plans to integrate GTC’s semiconductor testing operations with its own packaging capabilities and resources to better serve its customers.

The offeror’s chairman Chen Tie-Min is also chairman of Taiwan-listed Yageo Corp, which holds a 30.2 per cent interest in GTC. Chen is also on the board of GTC, and holds an 11.4 per cent stake.

Not surprisingly, GTC shares – which hadn’t attracted much investor interest for years – more than doubled immediately after the take-private deal was announced, ending last week at S$2.18.

Perhaps the next phase of the ongoing effort to revitalise the local bourse should include measures to encourage companies unable to garner an active investor following to exit the market at a decent valuation. This may facilitate a recycling of capital to companies that are winning over investors with well-conceived and skilfully executed strategies.

In the meantime, minority investors should not kid themselves about their own influence. As events over the past week have shown, boards are often driven by far more powerful forces than small investors voting with their feet.